There are loan sharks and then there are pay day loan stores. These are the stores that lend money on no credit and charge in 319% interest. If you can’t pay back the original pay day loan, then they renew and in many cases continue to loan money which ends up putting the customer in a trap that they will never escape.

Now, you can add banks to that pay day loan category. Banks such as Wells Fargo, Fifth Third Bancorp, and US Bancorp are already running a pay day loan program. Of course they certainly don’t call it that. Here is how it works – You can take out a short-term loan for 30 days. They charge $10 per $100 borrowed. That is the equivalent of 120% interest. The Wells Fargo spokeswoman says, “the advance is less expensive than a pay day loan.” So, in other words, it is OK to charge a fee that works out to around 120% in interest. The average pay day loan is $15 per $100. Wow! It looks like Wells Fargo is doing the customers a favor.

So, why are they going this route? Federal regulators finally cracked down on the abusive business of bank overdraft fees. This is the program where they give the customer the ability to continue use a debit card even though they are debiting more than is in the account. A bank customer could have nothing in his or her account, use the debit card 7 times in a day and have 100’s of dollars in fees because they didn’t know they were at a negative balance.

Now, federal regulators say that banks will have to give the customer the ability to opt into the program rather than just abusing them. This could be a loss of 15 to 20 billion dollars in revenue. Really? We should feel sorry for a banking industry that has used abusive means to make money. Just like the credit card industry, these banks will turn to different methods to abuse consumers. Now they are going to be pay day loan sharks. Sure 120% is lower than the 391% effective interest rate for pay day loans; however, it is still abusive. Banks are just going to provide another way for customers to get themselves into a problem.

Don’t worry – it will take regulators around 5 years or so until they deem this abusive then they will clamp down on the banking industry once again. It is amazing that the very people that are suppose to protect consumers from abusive consumer practices will allow these obvious abuses to be practiced for years before doing something about it. They allowed this practice of overdraft fees to go on for years.

Tags: Debt, Fees, interest rates, loan

I wanted to share some of the media coverage that is featuring Prudent Money. Some of the links below deal with my book, Deceptive Money, and some with general thoughts on investing and handling money.

The New York Times: Books to Help You Save, Spend, Understand Finances

The Chicago Tribune: Losing Fear of Budgeting Will Set You Free

Church Solutions Magazine: Church Can Help People Get Out of Debt

The Pocono Record: Books to Help You Save, Spend, Understand Finances

Santa Rosa Press Democrat: Young Investors Cautious Despite Stocks’ Rich History

MainStreet.com: The Best Paperbacks to Save You Greenbacks

Tags: Bob Brooks, books, budgeting, church Solutions Magazine, Debt, Deceptive Money, finances, MainStreet.com, Prudent Money, Santa Rosa Press Democrat, The Chicago Tribune, The New York Times, The Ponco Recors

I think that when we are looking back in the rearview mirror of this recession 2 years down the road, we will come to one conclusion: economists and Wall Street analysts made a mistake comparing this recession to normal recoveries. I have used this analogy before and think that it bears repeating. A normal recession is like getting a real bad case of the flu. You might be down and out for 2 weeks. However, you start to slowly recover and by about the 4th week you are feeling yourself again.

This type of recession is like cancer. The chemo treatment is long and painful and it takes a long time to recover. In most cases, you might not ever be the same. The bottom line is that recovery is going to be tough without the participation of the debt-laden unemployed consumer. This Friday we will get another look at the unemployment numbers for August. If they are anything like the preliminary numbers that came out today, they will not be pretty.

Michael Panzner, who writes an outstanding daily blog at www.financialarmageddon.com makes an excellent point in his September 1st post about a statistic that is getting very little press. However, it is a stat that is very troublesome. On a weekly basis, analysts report how retail sales are doing. Of course, they have been pretty dismal. When it comes to school time, shopping for the kiddos always takes precedent regardless of the economic times. It just seems that parents always discover a way to find money for back to school shopping. As a result, the week that typically is representative of the back to school shopping season has very strong retail sales numbers.

Well, that almost guaranteed trend wasn’t the case this time around. The retail sales numbers were awful for the week leading up to school. This was Panzner’s remark:

That’s nasty – one week before school starts in most of the country, and both weekly and year-over-year changes are deeply negative! Note that the week/over/week change was expected to be strongly positive, which correlates well with the “back to school” surge. No dice – that’s a miss of 1.1%, enormous by any standard.

The reason is simple: The consumer is tapped out.

The optimism for this recovery that the cheerleaders on Wall Street desperately want everyone to believe is going to be tough to buy when the consumer is this far in the hole. There are a lot of little signs like this that would suggest we have a long road ahead of us. What does that mean for you? It is vital to watch the amount of risk you are taking in every facet of your life – especially with your investments.

Tags: Bob Brooks, Debt, Deceptive Money, economists, Financial Armageddon, Michael Panzner, Prudent Money, recession, unemployed consumers, Wall Street

New Stock Market Alert : Unemployment Reports Better than Expected – Are we in the clear?
New Debt Tip : Debt Collectors Tricks

Congress could learn a lot from the American consumer. Last week it was reported that consumer debt decreased for the 5th straight time last month. Consumer debt declined 2.5% to $2.5 trillion. This is the longest decline in consumer credit since 1991. In addition, the consumer savings rate increased over 5% marking the largest jump since 1998. Let’s see, if you want to get out of debt, you just decrease spending, start saving money, and pay off debt.

Then there are the politicians. Treasury Secretary Tim Geithner is asking Congress to increase the federal debt limit. Said another way, the credit limit of 12.5 trillion dollars is just not going to cut it. Geithner sent politician Harry Reid a letter stating:

“It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations.”

Mr. Geithner, do you really think that getting Congress to raise America’s credit limit is going to keep investors and the rest of the world confident? Do you think that a consumer who is in over their heads with debt is going to keep his creditors confident by getting one of the credit card companies to raise the credit limit, giving him access to more credit?

This is a continuation of financial irresponsibility in Washington. Take a look at this chart that was posted by Michael Panzner at www.financialarmageddon.com/.

That graph doesn’t inspire confidence.

Tags: Bob Brooks, Congress, consumer debt, credit, Debt, Deceptive Money, federal debt limit, Financial Armageddon, investors, Michael Panzner, politicians, Prudent Money, saving, Treasury Secretary Tim Geithner, Washington

What would a 21% decline in income mean to you? This is what is happening to the US Government. Tax receipts, the money that pays for all of the irresponsible spending in Washington, is down -21% from June 2008 to June 2009. Individual income tax receipts are down -22%. Corporate income taxes are down -57%. You have to go back to the Great Depression to see these types of numbers. This also takes a hit on Social Security and Medicare. Tax receipts are down for Social Security and could drop for only the second time since 1940 and Medicare is on track to drop only the third time ever.

It is estimated that Social Security is on track to run out of money in 2036. Oh good, just in time for me to collect my benefits. Of course, Medicare is in worse shape.

The federal deficit now sits at $1.8 trillion. The national debt exceeds $11 trillion and the Government wants to spend more and more money.

…and the Government wants to pass a health plan that we really cannot afford as well continue to bail-out the world. The more disturbing aspect of this news is that the media is virtually ignoring it. After all, broadcasting this news all over the front pages of web-sites and nightly news casts would not bode well for the politicians and their quest to ramrod this health plan down the throats of Americans.

Where will all of this money come from to pay for all of the socialism in this country? Well, there are two sources. First, the politicians are betting on a robust economic resurgence. Well, let’s take that one off of the table. How about the second solution? Get ready, because taxes are going up for EVERYONE. Don’t be fooled by a campaign promise to only raise taxes on Americans making over $250,000. It will take a huge tax hike on everyone to stop the bleeding in Washington.

Over the weekend, the biggest economic hitter of the Obama Administration, Treasury Secretary Tim Geithner indicated that raising taxes is still on the table. Of course, the White House rushed to do damage control on Monday suggesting that President Obama would never go back on his promise. Things happen for a reason in Washington and Geithner’s remarks were no mistake. Timothy Geithner might not be smart enough to pay his taxes however; he knows what to say and when to say it.

Tags: Bob Brooks, Deceptive Money, federal deficit, health plan, income, Income Tax, Medicare, National Debt. Government, Obama Administration, politicians, President Obama, Prudent Money, raising taxes, Social Security, Tax hike, taxes, Treasury Secretary Tim Geithner, White House

New Stock Market Alert – The Bear Market had to be over…Right?

New Debt Tip – Night Line Busts these Debt Settlement Scams

The news is constantly reminding us that the Government is running up enormous levels of debt. A client of mine sent me a link to the US Debt Clock. In his e-mail, he described the site as “very telling.” Actually, it is downright frightening. This site calculates to the second all of these disturbing numbers that will haunt us and future generations for the rest of our lives.

As I watched all of these numbers increase, I began thinking about the job of a President and the most powerful career politicians. They can run up the U.S. debt for their own agendas because there are no consequences for them or their future.

Presidents and the most powerful of politicians will never experience the consequences of their actions. For instance, do you think that any one of these politicians will ever be on a waiting list because of the up and coming government run health plan? Of course not – What it would be like to do whatever you want and never reap the consequences?

Anyway…here are some stats:

Total U.S. National Debt…………………………11.6 Trillion
Average per citizen……………………………….37,861 per citizen
Dollars in Bailouts……………………………….11.8 Trillion
Estimated Medicare Fraud year to date……….34 Billion
U.S. Private Debt………………………………….7.2 trillion
Credit Card Debt………………………………….983 Billion
U.S. Debt per citizen………………………………23,675
Number of Foreclosures thus far in 2009……..1,271,043
Number of Bankruptcies thus far in 2009………611,310

The Scariest Number of All – the total amount of future liabilities (expenses that will come due in the future with no money to pay for it)…$57 Trillion Dollars

Maybe we could take away some of the benefits that these politicians get to pay for some of these expenses.

Tags: bailouts, Bankruptcies, Bob Brooks, credit card debt, Debt, Deceptive Money, foreclosures, future liabilities, Government, health plan, national debt, politicians, President, Prudent Money, US Debt Clock

The credit card and debt collection industries are quickly losing their ability to collect using the legal system which is good news for the consumer. When you sign a credit card agreement, you grant the credit industry the ability to settle any debts against you through arbitration. The credit industry uses arbitration because it is almost impossible for a consumer to win.

The debt collector has 1 of 2 ways to collect a defaulted debt. First, they can go about it the traditional way of being persistent and going through the debt collection process. If the consumer still doesn’t pay, they either give up and give the debt back to the original creditor or sell it to another debt collector, or they take legal action.

They take legal action in order to get awarded a judgment against the consumer. Once they have the judgment, the debt collector or original creditor has other avenues of collection available to them. For the consumer, this is the one thing you want to avoid. They can go about getting a judgment through the filing of a lawsuit or through the arbitration process.

Arbitration is much a different process than going through a lawsuit. There are no official papers served to the consumer. A letter is sent to the consumer alerting them that the arbitration process has been started against them. They are asked to respond to the letter. The vast majority of time the consumer doesn’t even show up for the arbitration proceedings. The main reason for not showing up is that they are forced to travel to the state where the arbitration proceedings are held. In addition, arbitration is industry friendly and is a process that always stacks the cards against the consumer.

The consumer doesn’t show up, they lose the arbitration, and then the debt collector or creditor is awarded a judgment through a court of law. It is anti-consumer and another way the debt industry traps the consumer.

The two largest arbitration associations in the country are National Arbitration Forum (NAF) and the American Arbitration Association (AAA). The NAF had a lawsuit filed against them last week for their secret association with a large debt collection firm. Apparently, the arbitration association and the debt collector owned a hedge fund and they were filing arbitration proceedings against consumers right and left. Both parties were owned by the same company. There was no impartiality at all. It was a consumer scam.

As a result, the NAF stated they will no longer participate in consumer based arbitrations. Just this week, the second largest association dropped out of the debt collection arbitration business as well. This takes away the two of the biggest players available to debt collectors, which is a huge victory for consumers. Now, it is going to be tougher for debt collectors to collect through legal means unless they want to file lawsuits.

As a result, consumers might have a better chance of getting through the collection process without the potential of legal action taken against them. As I write in my book, the key to surviving the debt collection process is to stay out of legal problems. In the state of Texas, you have 4 years past the first missed payment (statute of limitation period) to have legal action successfully pursued against you. Now, it looks as if a victory has been scored for those who need it most.

Tags: American Arbitration Association, Arbitration, Bob Brooks, consumer scam, credit card, credit card agreement, credit industry, creditor, Debt, debt collection, debt collector, Deceptive Money, hedge fund, lawsuit, National Arbitration Forum, Prudent Money, statute of limitations

You never want to let a serious crisis go to waste – Ron Emanuel

The politicians aren’t the only people who do not want to let a serious crisis go to waste.  There are also opportunists in the debt solution business that want to seize the opportunity as well.  These companies that do everything from credit counseling to settling your debt to “cleaning up” your credit will also take your money. 

Take former credit counselor Jason Matthew Malik as an example.  He helped a lot of people while bilking them for thousands of dollars.  Now Mr. Malik faces jail time for his service to the people in crisis.  Then there is the debt settlement firm in Addison, Texas.  Debt Settlement USA had to file for bankruptcy and has ceased operations due to allegations of fraud and investigations by the State Attorneys General and federal authorities.  If you were one of the lucky clients getting your debt “settled”, you are now out of luck.

The debt solutions business is filled with opportunities.  When they tell you they can magically make your problem go away, you just have to trust them. 

Then there is the National Federation of Consumer Counseling.  They say that they are on your side.  In my book, Deceptive Money, I write about the other side of that story.  A white paper written by the Consumers for Responsible Credit Solutions had this to say.

NFCC Board Member Companies Have Paid Record Fines for Abusing Consumers.  Creditors who have been represented on the NFCC Board of Trustees have recently paid hundreds of millions of dollars in Federal Trade Commission fines and other settlements for anti-consumer practices and abusing consumers’ rights.

Although the commercials and marketing telling you how easy it is to make your debt problem seem very enticing, let common sense guide you in the reality of it all.  There is a catch to these programs and I have it well documented in Deceptive Money.  The worst case scenario is you fall in the hands of a scam artist.   When there is a crisis, there are plenty of scammers ready to “help you out.”

Tags: bankruptcy, Bo, Bob Brooks, credit counseling, Debt Settlement USA, debt solution business, Deceptive Money, fraud, National Federation of Consumer Counseling, NFCC, politicians, Prudent Money, Ron Emanuel, scams

On the program the other day, I interviewed Senior Policy Analyst Pam Villarreal who is with the National Center for Policy Analysis.  We discussed the huge problem with Social Security and Medicare.  OK, make sure that you are sitting down when you consider this number.  

In her report, there is an unfunded liability of 107 trillion dollars.  If the Government had to pay out all of their liabilities that they owe just for those two programs, they would need 107 trillion dollars in the bank. It is not even imaginable.   

Currently, they take in money from payroll taxes and then pay it back out.  It is referred to “pay as you go.”  Social Security will work on that basis until 2016.  At that point, there will not be enough money coming into the Government to pay the Social Security tab.  Oh, and those trust funds are merely a myth.  Those were tapped a long time ago.

Actually Social Security is not even the current problem.  Medicare Part A is already underfunded. The Government has to go into the general fund just to pay for this.  There is not enough money coming in from payroll taxes to fund that program.  

So what is the solution?  Besides getting rid of all of the politicians (sorry just dreaming out loud), President Obama will be forced to go back on his promise not to raise taxes on the middle class.  Payroll taxes will have to go up.  Benefit periods will need to start later.  It is a combination of things.

Is it already too late to fix the problem?  Well Social Security and Medicare reform are not even on the agenda.  If the problem is not addressed soon, it will be a nightmare down the road.  There simply will be more people on benefit than people paying into the system.  

The Government is trying to figure out how to socialize the country and make sure that they pick up the tab for everything from health care to energy to running corporations of all types.  We have an unfunded 107 trillion dollar liability and the Obama Administration is coming up with program after program that will put us into more and more debt.  

The sad part is that we are so far past any solution now, when we are looking at trillions of underfunded liabilities.  

Consider this and put this in perspective:  I copied this information from an e-mail.

1 million seconds = 12 days, so a million seconds ago would be June 12, 2009

1 billion seconds = 32 years ago, wow, way back in 1977

1 trillion seconds = 32,000 years, approximately 30,000 years BC,
before Christ!  

Now multiply that by anywhere from 20 to 60!  Yes, Houston, we have a problem.

Tags: Bob Brooks, Deceptive Money, Government, liabilities, Medicare, Medicare Part A, Pam Villarreal, payroll taxes, President Obama, Prudent Money, Social Security, Tax Rate

It is well known that we are spending trillions of dollars that we don’t have.  It is well known that we have debt that generations 2 to 3 times removed will be feeling the effect of.  We are very dependent on tax revenues to pay for all of this practice of socialism.  Tax revenues are simply the taxes that you and I pay each year in the form of income taxes and are extremely important in the offsetting of all of this spending. 

So, how are those tax revenues looking now that we are beyond April 15th?  According to the American Institute for Economic Research, things don’t look so good.  Here is some of the information they just sent out in a press release:

Income tax season is over and the numbers are in:  The U.S. Treasury experienced the largest April-to-April decrease in revenues in nearly 30 years (since at least 1981, the earliest year for which monthly data are available).

History shows that federal tax revenues are usually highest in the month of April, when most tax returns are filed.  But according to a new commentary published by the American Institute for Economic Research (AIER), federal revenue showed a nearly 50% year-to-year decline, from $404 billion in April 2008 to just $266 billion in April 2009.

OK, President Obama I hope that you have an alternative game plan while you are not planning on raising taxes on the majority of America per your campaign promise.  I think that anyone can see the game plan.  It is simple math.  If you spend $1,000, you need at least $1,000 to cover the expenditure.  If you don’t have the $1,000, you have to find a way to increase the amount that comes into the bank. 

The only way the Federal Government can increase the amount needed to cover the outrageous spending is by raising taxes for EVERYONE. 

On a side note, I had an interesting conversation with someone last night who is a supporter of Obama.  I am always fascinated to hear the reasons why someone supports any politician.  I asked a simple question.  “Do you like the fact that the Obama Administration is turning this country into a socialistic country?”  His reply was “no, that really does bother me.”   Still he was a supporter.  There are a lot of Americans who believe that the whole concept of socialism is not a problem.  Obama’s support base is huge in this country regardless of his socialistic agenda.  I wonder how higher taxes are going to sit with those who support Obama? 

Don’t kid yourself – just taxing the “wealthy” in this country will not pay the bill.  It is going to take tax increase across the board.

Tags: American Institute for Economic Research, April 15, Bob Brooks, Deceptive Money, federal government, federal tax revenues, Income Tax, Obama, Obama Administration, politician, President Obama, Prudent Money, socialism, tax increase, Tax revenues, taxes, U.S. Treasury

I knew that the exclusion would be in the new laws. When I found a copy of the Credit Card Accountability Responsibility and Disclosure Act, I immediately went to the section that detailed when credit card companies can raise your rates.  For the most part, this new law stops credit card companies from utilizing the Universal Default Clause. This is the part of the credit contract that allows the credit card company to change the terms and conditions of the credit agreement for really no reason.  However, there are still parts of the law that give the credit card companies the ability to raise rates.

If you are over 60 days late, they can raise your interest rates.  Section 171 Part 3 is where the credit card companies are going to get millions of Americans.  The law states that “an increase (in interest rates is allowed) due to the completion of a workout or temporary hardship arrangement by the obligor (debtor) or the failure of the obligor (debtor) to comply with the terms of a workout or temporary hardship arrangement.”

IN PLAIN ENGLISH – If you rework your credit card debt, they can raise your rates.  A debt management program is a workout.  What these companies do for (to) consumers, in my opinion, fit the exception that is stated in the new law that allows credit card companies to raise interest rates and charge fees.  Why is that significant?  The credit card industry has put together this new campaign to “help” people who cannot make their payments.  The site is www.helpwithmycredit.org.  It is billed as a site you can go to get educated on your options.  Actually, it is a front for consumer credit counseling and basically steers you towards a credit counselor who then pitches a debt management program or a workout.  Plus consumer credit counseling is in overdrive advertising their services.

I believe that the credit card industry will steer as many people as possible towards those programs in order to get as much of the outstanding debt as possible away from the protection of this new law.  It is actually ingenious.  The credit card industry has always been ingenious in finding ways to make as much money as possible at the consumer’s expense.  As I stated yesterday, Congress is going to make sure that their campaign contributors (the credit industry) are just fine.

You not only need to read the fine print of credit card agreements. You also need to read the fine print of the credit card laws.

Tags: Bob Brooks, campaign contributors, Congress, Credit Card Accountability Responsibility and Disclosure Act, Credit Card Companies, credit card debt, Debt, Deceptive Money, Prudent Money, rates, Universal Default Clause

 (This is Part II of my new series on debt solution companies)

I was reading an article written by a TIME magazine writer entitled, “The Real Problem with Credit Cards:  The Cardholders.”  This writer basically states that it is the people in debt that are the problem.   I really had to take a step back and think through the content of the article to determine where I stood.

She writes, “There are piles of evidence that people are bad decision makers when it comes to how they use credit cards. Even when presented with full and fair information, they often make decisions that are not in their own economic best interest.”

She says that “the seeming solution would be to make clear to consumers exactly how much their credit cards are costing them.”

Although I agree that we all need to take personal responsibility with credit cards and the choices we make, I don’t think that her thesis flies.  It is true that no one stuck a gun to your head and made you buy the big screen TV at Circuit City (Oh, I miss Circuit City).  The blame clearly lies on an industry that sets the consumer up to fail. 

There is a reason that cocaine is illegal.  There is a reason that there are laws prohibiting excessive speed on highways.  There are reasons that laws are in place.  They are written to offer a layer of protection for the American citizen.  In my book Deceptive Money, I fully document how crooked the credit card industry has been through the years.  The consumer never had a chance.  There is no other consumer contract in existence to where one party can change the terms and conditions at will.  Credit card companies can change anything that they want after the consumer signs on the dotted line.

The problem is not fixed by telling people the fees and how much they are spending.  If you are going to rack up debt, you are going to do it whether or not the fine print is in big bold letters or not.  The solution is passing laws that state credit card companies cannot practice abusive tactics anymore.  That is the solution.  Another problem is the politicians that big businesses elect and put in office.  They have protected the credit industry for years and are only reluctantly pseudo doing something about it now. 

Yes, we all have to take personal responsibility. At the same time, the system has failed America because the politicians enabled it to do so.  It is a crooked system that should have been regulated by good laws a long time ago.  Had that been the case, we would not have the problem we have today.

Tags: Bob Brooks, credit cards, Debt, Deceptive Money, laws, Prudent Money, TIME magazine

 (This is Part I of my new series on debt solution companies)

I have a great deal of research on what I call the “debt solution companies” for my book Deceptive Money.  My objective was to find out what was really going on with these programs that claim to reduce interest rates, reduce payments, and reduce the overall time it takes to get out of debt.  As I have written about in great detail, you have to be careful trusting any of these businesses that make up the credit industry.  Although I am sure that legitimate companies exist, they unfortunately make up the minority. 

Let’s focus on the debt management program or DMP.  The process is simple.  Typically a consumer will come across the marketing from a consumer credit counseling company that is going to solve all of their debt problems just by picking up the phone.  The consumer will call the company for help with their credit card accounts.  The credit counselors will take down all of their information and come back to the consumer with a proposal.  The proposal will illustrate how long it will take the consumer to get out of debt staying on the current course.  The proposal then introduces a debt management program as a solution.  It shows lower rates, lower payments, and a reduced time period before the consumer is out of debt.

Let’s take a look at a real life example of a proposal that a listener sent me this past week.  The chart below shows the comparison between her current situation and then the proposed debt management program or DMP. 

So, what would you think if you first saw these numbers?  Your first conclusion would be that you were going to be paying on this debt forever.  According to this company, it will take you until August 2040 to get out of debt.  You would probably feel hopeless.  Anything looks better than your current situation.  The second conclusion would be that the credit counselor was offering you a much better deal.  Why wouldn’t you give it a shot? 

Here is the sad reality of these proposals and I think of this business in general.  This proposal is a total misrepresentation of the consumer’s situation.

I took the actual payments and interest rates on her debt (the same information that she gave the credit counselor) and ran the numbers myself.  If she paid her current payments and interest rates for the duration of the loans, the following would be the reality.

They estimated it would be 2040 before her debt was paid.  Actually it was 2016.  They estimated that it would cost her total interest of $ 24,414.61.  Actually it was $ 10,405.24.  Could this be anymore misleading?  Frankly, it makes me wonder if this could be considered fraudulent.  After all, the following language was in the introductory e-mail encouraging her to sign up for the program:

“Money Management International/Consumer Credit Counseling Services (MMI/CCCS) has developed a projected repayment plan to save you $19,631.19 in creditor payments.  A repayment plan through MMI/CCCS will also reduce the amount of time it would take to pay off your debts by 26 years.  The repayment plan calculations are based upon the creditor balances and interest rates that you provided.”

I have all of the documents.  She provided the credit counseling company with the same information that she provided me.  You be the judge.  I find it very difficult to trust any company that appears to be offering misleading proposals.  Unfortunately, every DMP that I have researched looks the same way.    

So, if these consumer credit counseling companies seem a little suspect to you, then what is the answer?

You can create your own debt management program.  How do you do that? 

PART II – Thursday May 14, 2009 :  Who is the real problem – Credit Card Companies or the Person in Debt?

Tags: Add new tag, Bob Brooks, credit counselor, Debt, debt management program, Debt solution, debt solution companies, Deceptive Money, interest rates, misleading, Prudent Money, reduce payments, repayment plan

OK, I am having one of those Excedrin days again.  According to a newly released poll, people really do think that President Obama is the Savior of the world.  I don’t know where I have been.  I thought we were deep in a recession that closely resembles what we experienced in the 30’s.  I thought that we were looking at a REAL rate of unemployment close to 20% (and the stated rate from the Government is not correct).  I also thought that we were spending money faster than a college student with his first credit card and an open line of credit.

Yes, this is the opening of an article that I read this morning. 

“For the first time in years, more Americans than not say the country is headed in the right direction, a sign that Barack Obama has used the first 100 days of his presidency to lift the public’s mood and inspire hopes for a brighter future.”

Does socialism really give us a bright future?  Here are the results as stated in this article:

-While there is evidence that people feel more optimistic about the economy, 65 percent said it’s difficult for them and their families to get ahead. More than one-third of Americans know of a family member who has recently lost a job.

-More than 90 percent of Americans consider the economy an important issue, the highest ever in AP polling.

-Nearly 80 percent believe that the rising federal debt will hurt future generations and Obama is getting mixed reviews at best for his handling of the issue.

And yet, the percentage of Americans saying the country is headed in the right direction rose to 48 percent, up from 40 percent in February. Forty-four percent say the nation is on the wrong track.

OK, let me get this right.  90% believe that the economy is the most important issue.  65% of families are struggling.  80% believe that we are destroying our children’s future…yet…people are optimistic about the future?

Can we really take the associated press seriously?  Well, I cannot tell fact from fiction anymore.  I am going to write this off as the AP doing a PR job for the Obama Administration.  If not, it just points to the comment that I made this week about the dumbing down of America.  If people are optimistic, then people are completely in the dark about what is occurring in this country.  That is why you will never get the type of public outcry that will make a difference.  The minority are the only ones not drinking the kool-aid.

Tags: Bob Brooks, Deceptive Money, economy, federal debt, Obama Administration, President Obama, Prudent Money, socialism

So, what is the newest frontier of debt collecting?  Well, it happens to be collecting from the dearly departed. Yes, debt collecting from families who have just lost a loved one.  Now, let’s start with the legal obligations of debts from someone who is now deceased.  A debt is still owed regardless of whether someone is still living or has passed away.

However, the only way a debt collector can collect that debt is by going after the deceased’s estate.  The surviving family only has an obligation for the debt to the extent that there is available money they would receive through inheritance.

If there is no estate, the surviving family has no legal obligation to make that payment.  

What if there is no estate?  What do the debt collectors do at that point?  Well, there are two approaches.  One approach is good old debt collector harassment through the form of guilt and playing on emotions.  The second approach, as described in a New York Times article, is “empathic active listening.”

At one debt collection firm, they put their new hires through a 3-week training program to teach them to approach the surviving spouse or family member with a mix of the “comforting air of a funeral director and the nonjudgmental tones of a friend.”

If you ask me, this is the lowest form of debt collecting.  If there is no estate, the family should be left alone.

Tags: Bob Brooks, Debt, Debt Collecting, Deceptive Money, Prudent Money